Look at the period in the graphs from mid 2003 to mid 2004. Housing was rising - there was no need for super aggressive policy. That's was when the Greenspan/Bernanke Fed lowered fed funds to 1%. This led mortgage industry to issue all kinds of esoteric mortgages to people who could only afford expensive houses and starter homes as long as interest rates didn't move higher and housing prices didn't drop. The Fed did this because they feared the deflation taking place in Japan and wanted to show that the U.S. is proactive.Well today we are getting what they feared. We are on the verge of deflation. It proves that there are economic laws just like there are laws in physics. All of this manipulation cannot get around them. The Classical economists were right - you need to have the economy adjust on its own. Otherwise you get what the Austrians call malinvestments.In Maryland builders are building like crazy. The overhang will be here for a while. The news for the key in this recovery - employment - is not good.